This is what consumer fatigue looks like

When the iPhone 5 and the iPad Mini came out, people joked that you would be able to own a comprehensive gradient of screen sizes between phone and tablet. Well, if you consider both Android and iOS, that turns out to be the case now:

If you've walked into a Best Buy (people still do that, right?) recently or tried to browse online for a new phone or tablet, you've probably been overwhelmed by the choices. This overwhelming indecisiveness (#firstworldproblems) is known as "consumer fatigue," and Rahul Raghavan gives a pretty good summary on Quora:

Providing choice is very good up to a point. Even minor variations in product that provide a very superficial "choice" to consumers is beneficial (buyers find it empowering, sales go up).

Beyond this, paradoxically, too much choice overwhelms people to the extent that they end up paralyzed and don't choose anything. There are cases where reducing the number of variants of a product leads to increased sales (a famous experiment involving jams).

If you have to provide a lot of choice, divide the variants into a small number of clearly delineated categories, with a small number of choices in each category. Consumers then quickly choose their category of interest, then choose the product their want - Two less taxing choices are better than one large choice.

Some research suggests that the number of options where "good choice" becomes "bad choice" is about 7 - the same as Miller's Magic Number 7, the number of things that may be held in working memory by the average human.

A few years ago, one could have attributed consumer fatigue in the smartphone market to the novelty of the smartphone industry and companies taking a see-what-sticks approach to product design, which is common in young markets. My colleague Tom Loverro wrote a similar post two years ago about the state of the phone industry then.

But what explains the fatigue now? After the surge and death of many designs that accompany a growing industry, companies left standing quickly trim to what works and thereby reduce consumer fatigue. HTC rose from lowly OEM to brand-name prominence by churning out dozens of Android phones during the smartphone boom of 2011, and quickly came crashing back down in 2012. HTC then declared that it would focus on “less product, more exposure on those" - the result of which is the aptly-named HTC One. Samsung's website now only features its successful Galaxy line of Android phones. Apple is the only outlier, having been extraordinarily conservative with SKUs - iPhone and only iPhone - and made itself king of the smartphone market before branching out into tablets and other form factors. It has actually increased its consumer offerings during the swell and die-off in the smartphone market.

We go back to Rahul's point: if you have to provide a lot of choice, divide the variants into a small number of clearly delineated categories. It turns out that within brands, manufacturers have actually done a decent job of reducing fatigue and providing sets of choices:

Samsung's Offerings

Apple's Offerings

Samsung's offerings provide the same set of choices as Apple's: phone versus tablet, small versus big. The relatively rare Galaxy Mega I will discount as a dying breath of Samsung's make-all-the-phones philosophy.

Now, consumer fatigue arises when we conflate the reasonable choices that independent manufacturers offer. As a result of a mind-numbingly inefficient IP law system, every manufacturer is arriving at the same set of choices just slightly differently than every other manufacturer to avoid getting sued - and the result is our wonderfully messy gradient of choices.

In a clear example of competition and patent law hurting the consumer, smartphone manufacturers are doing a lot of redundant work (Apple maps) and forcing each other to find kludgey workarounds (no Google ActiveSync in iOS using Microsoft Exchange?). Although the industry is moving beyond the point where there are more SKUs per manufacturer than you can count on two hands, there's still a lot of progress to be made in patent law and protocol standardization before we reach the sort of techno utopia that all TED Talks seem to be all about these days.

ABOUT RRE

RRE Ventures is an early-stage venture capital firm headquartered in New York City. Since our founding in 1994 we have sought out and partnered with extraordinary entrepreneurs who seek to disrupt and transform industries.